Read This Before Buying Aditya Birla Fashion and Retail Limited (NSE:ABFRL) Shares

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Aditya Birla Fashion and Retail Limited (NSE:ABFRL), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for Aditya Birla Fashion and Retail

Aditya Birla Fashion and Retail Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Krishna Maheshwari, sold ₹8.0m worth of shares at a price of ₹278 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of ₹155. So it may not tell us anything about how insiders feel about the current share price. Krishna Maheshwari was the only individual insider to sell over the last year.

Krishna Maheshwari divested 38.73k shares over the last 12 months at an average price of ₹239. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Aditya Birla Fashion and Retail better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. From our data, it seems that Aditya Birla Fashion and Retail insiders own 0.3% of the company, worth about ₹431m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At Aditya Birla Fashion and Retail Tell Us?

The fact that there have been no Aditya Birla Fashion and Retail insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Aditya Birla Fashion and Retail, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Aditya Birla Fashion and Retail. For example - Aditya Birla Fashion and Retail has 1 warning sign we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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